Start-up Nation

Start-up Nation: The Story of Israel's Economic Miracle

Author	Dan Senor and Saul Singer
Country	United States
Language	English
Publisher	Twelve
Publication date	November 4, 2009
Media type	Print (hardcover)
Pages	320
ISBN	9780446541466

Start-up Nation: The Story of Israel's Economic Miracle is a 2009 book by Dan Senor and Saul Singer about the economy of Israel. It examines how Israel, a 60-year old nation with a population of 7.1 million, was able to reach such economic growth that "at the start of 2009, some 63 Israeli companies were listed on the Nasdaq, more than those of any other foreign country".

In 2010, Start-up Nation was ranked fifth on the business best-seller list of the The New York Times. It was also on the The Wall Street Journal bestseller list.

Book overview

The Council on Foreign Relations states in its blurb for the book that Start-up Nation addresses the question: "How is it that Israel--a country of 7.1 million people, only sixty years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources--produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the United Kingdom?" The Economist notes that Israel now has more high-tech start-ups and a larger venture-capital industry per capita than any other country in the world. The success of Israel's high-tech sector over the past two decades has attracted recent attention from business journalists and The Economist describes Start-Up Nation as the most notable of a "growing pile" of books on the subject.

The book analyzes three major factors that, in the authors' opinion, contribute most to Israel's economic growth. Those factors are immigration, R&D, and mandatory military service.

Discarding "the argument from ethnic or religious exceptionalism, dismissing "unitary Jewishness" or even individual talent as major reasons for Israel's high-tech success", the authors argue that a major factor for Israel's economic growth can be found in the culture of the Israel's military subordination, in which "You have minimal guidance from the top, and are expected to improvise, even if this means breaking some rules. If you're a junior officer, you call your higher-ups by their first names, and if you see them doing something wrong, you say so." Neither ranks nor ages matter much "when taxi drivers can command millionaires and 23-year-olds can train their uncles," and "Israeli forces regularly vote to oust their unit leaders."

The book dwells at length on immigration and its role in Israel's economics's growth: "Immigrants are not averse to start from scratch. They are by definition risk-takers. A nation of immigrants is a nation of entrepreneurs. From survivors of the Holocaust to Soviet refuseniks through the Ethiopian Jews, the State of Israel never ceased to be a land of immigration: 9 out of 10 Jewish Israelis today are immigrants or descendants of immigrants the first or second generation. This specific demographic, causing fragmentation of community that still continues in the country, is nevertheless a great incentive to try their luck, to take risks because immigrants have nothing to lose."

Using stories and anecdotes, the book provides examples of Israel's technological and medical achievements, among them "the Israeli innovations that made possible Google Suggest, the list of suggestions that appear instantly in menu form as you type a search request, the Capsule endoscopy, a miniature camera embedded in a pill so that 18 photos per second can be wirelessly and painlessly transmitted from gastrointestinal tracts."

While the book describes Israel's many successes in technological innovation, it also attempts to address, in the words of one reviewer, why Israel still lacks its own "Nokia, Samsung, or IBM". According to the book's authors, this is partly because Israeli startups tend to be bought up by large foreign companies, and partly because Israeli business has thus far failed to develop the kind of mature management culture needed to run such large companies.

In their introduction, the authors describe the book as "a book about innovation and entrepreneurship, and how one small country, Israel, came to embody both...While our admiration for the untold story of what Israel has accomplished economically was a big part of what motivated us to write this book, we do cover areas where Israel has fallen behind." Senor and Singer interviewed over 100 people to write the book, among them leading Israeli venture investors, key players in Google, Intel and Cisco, historians, U.S. military leaders and Israeli heads of state. Their conclusion is that "while Israel has much to learn from the world, the world has much to learn from Israel."

Critical reception

Praise

Jon Rosen from USA Today believes that the book is written from an Israeli perspective and may irk those with reservations about Israeli foreign policy, but it is still an accomplishment, "not simply for exposing the roots of Israel's success, but by showing what the Israeli case might teach the rest of the world." In The Wall Street Journal, James K. Glassman says that "The greatest strength of Start-Up Nation is not analysis but anecdote. The authors tell vivid stories of entrepreneurial success, such as that of Shai Agassi, the son of an Iraqi immigrant to Israel, with his electric-automobile technology, now in the process of creating 'Car 2.0.'"

Publishers Weekly states that "The authors ground their analysis in case studies and interviews with some of Israel's most brilliant innovators to make this a rich and insightful read not just for business leaders and policy makers but for anyone curious about contemporary Israeli culture."

In The Economic Times, R Gopalakrishnan writes that the use of Hebrew expressions make the book "alive and eminently-readable." Besides chutzpah the authors use the word bitzua, which basically means "getting things done". Another Hebrew expression used in the book is "Rosh gadol", which could be translated "can-do and responsible attitude with scant respect for the limitations of formal authority". Gopalakrishnan concludes that the ideas demonstrated in the book "are highly relevant for innovation capability in general, but for India, especially at this juncture."

David Horovitz of The Jerusalem Post says that conclusions of Start-up Nation find confirmation in the real world, such as how the life of Congresswoman Gabrielle Giffords was saved when the emergency medical team applied a revolutionary elasticized bandage developed in Israel that staunches head wounds.

A review in The Washington Post says that "The book weaves together colorful stories of Israeli technological triumphs" such as the story of Shvat Shaked, who "founded a cybersecurity firm with his old buddy from Army intelligence and had the chutzpah to bet a top executive at PayPal, the online commerce company owned by eBay, that his few dozen engineers could beat PayPal's thousands in developing secure online software."On the other hand, the authors could have done a better job in drawing "straight lines between their theories about Israel's success and these case studies"

Maureen Farrell of Forbes was disappointed that the authors mostly ignored the effects of U.S. foreign aid but says the book "is worth reading to understand not just Israel's history but the history of capitalism and innovation."

Alex Brill writes in Transatlantic Dialogue that "The book's value extends beyond those interested in the fascinating stories of companies like Intel investing $3.5 billion in Israel so that Israeli engineers could lead the development of the Pentium processors or the fact that Israel has one start-up for every 1844 Israelis, more companies listed on NASDAQ than any country except the U.S. or more venture capital investment as the United Kingdom, a country nine times more populous."

Criticism

Ruth Schuster, reviewing the book for Haaretz, feels it is "tarnished by a jarring, tub-thumping patriotism." Jim Miles, in The Palestine Chronicle, disputes many of the book's premises and concludes, "There is no economic miracle in Israel." A review in The Christian Science Monitor notes that "critics say that the story behind how a country of 7 million has more Nasdaq-listed companies than Europe is more complex than Singer and Senor paint it to be."

According to Steven Davidoff in the New York Times, the book attributes Israel’s success to "its military and the requirement that all citizens serve a period of service. The maturity and entrepreneurial nature of the military combined with an influx of Russian émigrés created Israel’s venture capital network." Davidoff says the "book may be right, but the authors do not explain a Mark Zuckerberg, who, like most of Silicon Valley’s celebrities, never served in the military."

Economist Yusuf Mansour, writing in the Jordan Times, stated that while the book notes the less successful economic achievement of Arab Israelis, it fails to mention the educational disadvantages faced by this segment of the population. On the question of foreign aid, Mansour notes that Israel receives substantial aid from the U.S. government and other foreign sources, which he estimates at $570 per person annually. He also states that Israel received $4.2 billion in foreign aid to resettle the approximately one million Soviet Jews who migrated to Israel since the 1980s. He also takes the book to task for failing to mention the contribution to Israel's economy from the occupied territories.

Gal Beckerman, writing in The Forward magazine, observes that the book "presents Israel in an extremely positive light as a bastion of entrepreneurial spirit and technological achievement. It skirts a discussion of the conflict with the Palestinians, or even the wealth inequality within Israel, thereby dovetailing nicely with recent public relations efforts by Israel to shift attention away from its problems and toward its achievements."

Impact

American Enterprise Institute fellow Alex Brill believes Start-up Nation "provides lessons about how to foster and even harness entrepreneurship, innovative energies and hard work for every country." A review of the book in The Irish Times calls on Ireland to follow Israel’s model. Andrius Kubilius, the prime minister of Lithuania, has cited Start-up Nation as his favorite book. Solon Partners an executive consulting and angel investor company in Estonia, says "there is much to be learned from the Israeli experience of venture capital incubation through building incentives for privatization." CNN’s Fareed Zakaria called Start-up Nation "a book every single Arab businessman, Arab bureaucrat, and Arab politician should read."The book is cited as a handbook of "classic economics." It teaches small businesses "how effective a cohesive team can be, especially when that team places an emphasis on chutzpah first."

See also

• Israeli inventions and discoveries
• Science and technology in Israel
• List of Israeli companies quoted on the Nasdaq